PROBLEM:

P Company owns 60% of the outstanding common stock of S Company. On June 30, 2011, S Company sold equipment to P Company for $600,000. The equipment cost S Company $800,000 and had accumulated depreciation of $500,000 on the date of the sale. The management of P Company estimated that the equipment had a remaining useful life of four years from June 30, 2011.

To solve: Prepare the w/p entry to eliminate the intercompany sale of equipment